Market experts react to ECB’s interest rate cut

The European Central Bank (ECB) announced a 25 basis point reduction in key interest rates today, a decision that was broadly anticipated by financial markets. Analysts and industry figures from across the real estate and finance sectors offered their perspectives on the move and its potential implications.

Prof. Dr. Felix Schindler, Head of Research & Strategy at HIH Invest, noted that the ECB’s decision aligns with expectations given the recent easing of inflation in the eurozone. He pointed to the influence of ongoing international tariff discussions and the potential for increased imports of Chinese and European goods as contributing factors to lower inflationary pressures. However, Schindler cautioned that rising prices in food and services require continued monitoring. He added that the impact of deglobalisation and tariff policies remains uncertain over the long term. Despite this, he emphasized the importance of focusing on resilient sectors and structurally undersupplied markets in real estate, which are likely to offer stable returns and long-term value.

Francesco Fedele, CEO of BF.direkt AG, welcomed the rate cut, describing it as a necessary move in a context where inflation risks have diminished. He highlighted the benefit for property developers, who will likely experience some financial relief as borrowing costs ease.

Prof. Dr. Steffen Sebastian of the IREBS Institute for Real Estate Economics at the University of Regensburg also supported the ECB’s decision, though he expressed caution regarding the potential effects of new trade tensions initiated by the United States. He warned that these developments could trigger stagflation—a mix of economic stagnation and rising prices—which would require a reassessment of current monetary policy.

Michael Morgenroth, CEO of CAERUS Debt Investments, expressed some surprise at the ECB’s action, suggesting that current inflation and economic data did not necessarily call for an immediate rate reduction. He pointed out that yields on German government bonds, a key reference for mortgage markets, had recently normalised following temporary fluctuations. Morgenroth expects the ECB to adopt a more neutral stance in the short term, especially in light of shifting global capital flows influenced by U.S. fiscal and trade policies.

While the ECB’s move was largely anticipated, the responses reflect a mix of cautious optimism and concern about external pressures that could influence monetary policy going forward.